Seventh Circuit Holds Disparate Impact Age Claims Not Applicable to External Job Applicants

By Russel W. Jackson

In Kleber v. CareFusion Corp. (7th Cir. Jan. 23, 2019) (en banc), a divided Seventh Circuit Court of Appeals held outside job applicants cannot bring disparate impact claims for age discrimination under the Age Discrimination in Employment Act (“ADEA”). Disparate impact claims are those brought against employers who have implemented policies or practices appearing neutral on their face, but disproportionately impacting a protected group. A common disparate impact allegation is testing that effectively screens out a minority group from the hiring process. Disparate treatment claims, on the other hand, allege intentional discrimination based on protected status.

Factual and Procedural Background

In March 2014, Dale Kleber applied for a senior in-house attorney position in CareFusion Corporation’s legal department. The job description for the position required “3 to 7 years (no more than 7 years) of relevant legal experience.” Kleber was 58 years old and had more than the seven years of pertinent experience. Kleber did not receive an offer, and CareFusion hired a 29-year-old who had the requisite experience, but did not exceed it.

Kleber filed suit pursuing ADEA claims for both disparate treatment and disparate impact. The district court granted CareFusion’s motion to dismiss, reasoning the text of the ADEA’s disparate impact language did not extend to outside job applicants. Kleber voluntarily dismissed his disparate treatment claim and appealed the disparate impact ruling.

Majority Relies On Plain Language

On appeal, the Seventh Circuit majority began its analysis with the text of the disparate impact statute, which states it is unlawful:

to limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s age;

29 U.S.C. § 623(a)(2).

Relying on the plain language, the court determined that the “requisite impact must befall an individual with ‘status as an employee.’” The court ruled that the reach of the statute does not extend to applicants because common dictionary definitions confirm an outside applicant has no status as an employee.

Kleber argued the language in the middle of the statute – “deprive or tend to deprive any individual of employment opportunities” – indicated that Congress intended to cover “any individual,” including outside job applicants. The majority rejected this argument, noting the language only covers “any individual” deprived of an employment opportunity because the conduct “adversely affects his status as an employee.”

Comparison To Other ADEA Provisions

The court compared the disparate impact statute to the ADEA’s disparate treatment provision, which makes it unlawful for an employer “to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual … because of such individual’s age…” 29 U.S.C. § 623(a)(1). Based on the “fail or refuse to hire” verbiage, the court concluded there is no dispute that the disparate treatment provision covers outside job applicants. The court reasoned that Congress’s inclusion of such language in the disparate treatment provision and its apparent deliberate omission of similar language from the disparate impact provision was an indication that Congress intended a difference in the statutes.

The Seventh Circuit also reviewed § 4(c)(2), which prohibits labor organizations from engaging in age discriminatory practices. The language of the labor organization statute provides it is illegal “to limit, segregate, or classify its membership, or to classify or fail or refuse to refer for employment any individual, in any way which would deprive or tend to deprive any individual of employment opportunities, or would limit such employment opportunities or otherwise adversely affect his status as an employee or as an applicant for employment, because of such individual’s age…” 29 U.S.C. § 623(c)(2) (emphasis added.) The court also analyzed the ADEA’s retaliation statute, making it unlawful to “discriminate against any of his employees or applicants for employment.” 29 U.S.C. § 623(d) (emphasis added.)

The majority noted these three provisions differentiate between employees and applicants. By including references to applicants, the court held it is implausible that the court meant to use the term “employee” in the disparate impact statute to cover employees as well as outside job applicants.

Griggs v. Duke Power

Kleber attempted to rely on a 1971 Supreme Court decision, Griggs v. Duke Power Co., 401 U.S. 424 (1971), to contend disparate impact for outside applicants was viable. In Griggs, African-American employees challenged Duke Power’s practice of conditioning job transfers and promotions on high school graduation and standardized tests. The Griggs plaintiffs sued under a Title VII disparate impact theory. At that time, Title VII mirrored the ADEA’s current disparate impact provision. The Griggs Court found that Title VII’s language prohibited disparate impact discrimination by proscribing “practices that are fair in form, but discriminatory in operation.”

The Kleber court declined the opportunity to read Griggs for the proposition that outside job applicants can pursue disparate impact claims because nowhere in Griggsdid the Court hold that its decision extended to applicants. The majority found it significant that the claims in Griggs were brought by current employees – not outside job applicants.

Title VII’s 1972 Amendment and Gross v. FBL Financial Servs., Inc.

The Kleber majority also reasoned that the Court’s 1972 amendment to Title VII’s disparate impact provision – at issue in Griggs the prior year – further cemented the court’s position. The amendment added language to Title VII’s disparate impact provision to expressly cover “applicants for employment.” The majority concluded that if Title VII’s previous disparate impact language, which mirrored the ADEA’s, already covered applicants, there would have been no need for the amendment.

The Seventh Circuit also used the Gross v. FBL Financial Servs., Inc., 557 U.S. 167 (2009), decision to further its conclusion. In Gross, the Supreme Court held that under the ADEA, plaintiffs must establish that age was the but-for cause of an adverse employment action. This is a different standard than that for Title VII claims, which only requires that race be a motivating factor. The Kleber court determined that paramount to the Gross decision were obvious textual differences between the ADEA and Title VII brought about by Congress’s Title VII amendments. The court found instructive that the Supreme Court held that prior decisions interpreting Title VII do not control the construction of the ADEA, where the texts of the provisions are “materially different.” As a result, Congress’s decision to add “applicants” in Title VII, but not to amend the ADEA was meaningful.

The majority found that its holding gave effect to the plain limits embodied in the ADEA’s disparate impact statute. The court also noted that Congress remains free to extend disparate impact ADEA coverage to outside job applicants, as it did with Title VII.

Dissenting Opinion

The dissent criticized the majority decision’s reliance entirely on their reading of the statute’s text. The dissent determined “any individual” in the statute would clearly reach job applicants and that “otherwise adversely affect his status as an employee” does not limit the scope, but, instead, is a catch-all for unknown situations. The dissent also opined “status as an employee” could include when an individual is denied an opportunity to become an employee.

The dissent was highly critical of the majority’s interpretation of Griggs. The dissenting judges noted Griggs was a class action that “beyond reasonable dispute” included job applicants. The class definition in Griggs specifically included anyone “who may hereafter seek employment.” The dissent also reviewed subsequent Supreme Court decisions, which all read Griggs as governing hiring practices.

The dissent pointed to Title VII’s 1972 amendment as further support for its position, noting the majority “overlooked the long-recognized difference between substantive and clarifying statutory amendments.” The addition of “applicants for employment,” the dissent contended, was only a minor change to Title VII mentioned briefly and simply incorporating existing law.   The dissent determined the amendment did not extend Title VII, and that there is no foundation for inferring the amendment was a silent endorsement of a narrow interpretation in the ADEA’s identical language.

The dissent also reviewed the legislative history and found that Congress enacted the ADEA to address employment practices making it difficult for older individuals to find jobs. The dissent pointed to the Department of Labor’s Wirtz Report, the catalyst for the ADEA, and found the report had job applicants in mind. The dissent determined that “[a] central goal – arguably the most central goal – of the [ADEA] was to prevent age discrimination in hiring.”

Conclusion

The Kleber decision is a helpful decision for those employers facing age-related disparate impact claims by outside job applicants, but companies should remember it applies solely to disparate impact claims of age discrimination arising under the ADEA. Employers should be aware that disparate treatment claims remain viable under the ADEA. Companies may also want to consult legal counsel if there are questions as to whether their hiring or other personnel policies could adversely affect certain groups – particularly those individuals still afforded protection under Title VII, including race, color, sex, religion, and national origin discrimination.